Saudi Arabia Threatens Retaliation Over G-7 Seizure of Russian Assets


Saudi Arabia has issued a warning that it might sell off some of its European debt holdings in response to the G-7’s consideration of seizing nearly $300 billion in frozen Russian assets, according to a Bloomberg report. This warning was conveyed by Saudi Arabia’s finance ministry to some G-7 counterparts earlier this year as the group deliberated on using Russian assets to support Ukraine.

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Saudi Arabia specifically indicated it might target euro-denominated debt issued by France. Riyadh has expressed concerns for months about Western efforts to confiscate Kremlin assets. In April, Politico reported that Saudi Arabia, along with China and Indonesia, had been privately lobbying the EU against such confiscation.

The threat from Saudi Arabia to unload European Union debt would represent a significant move, demonstrating the kingdom’s willingness to use its economic power to influence Western policymakers.

In June, the G-7, which includes the US, Canada, the UK, France, Germany, Italy, and Japan, agreed to provide Ukraine with $50 billion in loans backed by profits generated from Russian assets. However, this move stopped short of a full seizure of the approximately $322 billion in Russian central bank assets frozen in the West. Bloomberg noted that Saudi Arabia’s warning likely bolstered opposition among some EU member states to a more aggressive approach, despite the US and UK advocating for direct seizure.

Russia-Saudi Ties in the Spotlight

Saudi Arabia’s threat highlights concerns in wealthy Gulf states that the West might apply similar economic pressures against their assets if issues such as human rights or foreign policy decisions become contentious again. Russian President Vladimir Putin has sought to strengthen ties with Saudi Arabia, relying on the oil-rich kingdom to help counter Moscow’s isolation and stabilize energy markets. Putin made a rare visit to Saudi Arabia and the UAE in December.

Middle East Eye reported that Putin sought Crown Prince Mohammed bin Salman’s approval before arming Houthi rebels in Yemen with anti-ship cruise missiles. The Saudi leader, engaged in a brutal war against the Iran-backed Houthis, urged Putin not to arm the group, and Russia complied.

Saudi Arabia, a major exporter of crude oil, pegs its currency to the dollar and sells its oil in dollars, reinforcing the dollar’s status as the world’s reserve currency. In January 2023, Saudi Arabia mentioned it was considering trading in currencies other than the US dollar following discussions with China about selling some crude in yuan.

Although it’s unclear how much European debt Saudi Arabia holds, its central bank’s net foreign currency reserves stand at $445 billion. Saudi Arabia holds $135.9 billion in US treasuries, ranking it 17th among investors in US bonds.

US President Joe Biden’s pledge to make Saudi Arabia “a pariah” over the murder of journalist Jamal Khashoggi crystallized fears that Washington might one day turn against its long-time ally. However, Biden has since shifted his stance, now relying on Saudi Arabia to help normalize relations with Israel and contribute to post-war governance of the Gaza Strip.

By Naija247news
By Naija247news
Naija247news is an investigative news platform that tracks news on Nigerian Economy, Business, Politics, Financial and Africa and Global Economy.

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